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Faith In Abenomics Falters: Foreign Investor Flows Collapse 94% In 2014

Tyler Durden's picture




 

It appears, despite all the promises, all the lies, and all the constant propaganda, that foreign investors have finally seen right through Shinzo Abe's risible plan to revive the Japanese economy by crashing its currency (just like Russia?). As Bloomberg reports, after pumping record amounts of cash into Japanese shares last year, they’ve hardly added to holdings in 2014. Inflows are down 94 percent this year to 898 billion yen ($7.5 billion), on pace for the smallest annual amount since the 2008 global financial crisis.

 

 

While polls suggest simultaneously a surge in Abe approval and a plunge (depending on which survey you follow), it appears the market has provided the clearest look at how global investors have become disillusioned with Abenomics... so all that is left if BoJ/GPIF buying Japanese bonds/stocks to keep the facade alive.

 

As Bloomberg reports,

Purchases of the nation’s shares through Dec. 19 by investors outside Japan were less than a tenth of the 15.1 trillion yen they bought last year, according to data from the Tokyo Stock Exchange. Trust banks, which typically trade on behalf of pension funds, added 2.7 trillion yen, after offloading about 4 trillion yen of equities in 2013. Individuals were net sellers for a fourth straight year.

 

Fund managers from Sumitomo Mitsui Trust Bank Ltd. to MV Financial say to lure investors back, Abe needs to move beyond short-term stimulus and start enacting the structural changes he laid out in his initial plan, dubbed Abenomics, to end Japan’s two-decade economic malaise.

 

“We need to see a framework where growth isn’t dependent on monetary easing,” Ayako Sera, a market strategist at Sumitomo Mitsui Trust, which oversees $325 billion in assets. “If not growth, then at least a way to increase productivity. For now there’s nothing like that, so I imagine it’ll be hard for stocks to keep going higher and for foreigners to take an interest in them.”

 

They have lost their place as global leaders. The potential exists in Japan for recapturing some of that, but it requires profound changes and changes are just not something that Japanese are good at.”

 

...

 

Abe has courted international investors, exhorting Wall Street in a September 2013 speech to “buy my Abenomics.” A year later, the higher consumption levy had pushed the nation back into recession. Non-domestic investors were net sellers of equities this year until the central bank’s surprise easing on Oct. 31. While the Topix has climbed 9.4 percent in 2014, a weakening yen means that in dollar terms, the share gauge is poised for a 4.4 percent loss.

 

 

Foreigners are “momentum jockeys” who tend to follow the trend...

 

“If an eye-opening growth strategy was proposed, foreigners might come back and start buying again,” Sumitomo Mitsui Trust’s Sera said. “But if we haven’t seen one by now, there’s almost no chance we ever will.”

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Mon, 12/29/2014 - 22:22 | 5603724 FieldingMellish
FieldingMellish's picture

I know... print more money, that always works.

Mon, 12/29/2014 - 22:30 | 5603758 LetThemEatRand
LetThemEatRand's picture

James Bond figured it out a long time ago.  Double down with the Queen's (people's) money, and wear a nice tux doing it and get laid after, win or lose.  

Mon, 12/29/2014 - 22:32 | 5603774 stinkhammer
stinkhammer's picture
Foreign Investor HA!   only central banks      the whore Janet
Mon, 12/29/2014 - 22:57 | 5603863 remain calm
remain calm's picture

Janet's all in.

Janet to Abe:  "I will blow you if you blow me".

Mon, 12/29/2014 - 22:59 | 5603869 LetThemEatRand
LetThemEatRand's picture

Abe: “I always enjoyed learning a new tongue.”

Janet: “You always were a cunning linguist, Abe.”

Mon, 12/29/2014 - 23:26 | 5603964 knukles
knukles's picture

Just so everybody understands fully, Abenomics is merely the same old shit over again with a different name.
Hyper expansive monetary policy, hyper expansive fiscal policy, all spent on horeshit shovel ready type crony jobs to nowhere on 100% monetized deficit money.

Mon, 12/29/2014 - 23:29 | 5603976 LetThemEatRand
LetThemEatRand's picture

I think we're at the point where we can go ahead and call it ludicrous speed monetary policy.  

Tue, 12/30/2014 - 07:34 | 5604515 DavidC
DavidC's picture

Nicely put knukles.

DavidC

Mon, 12/29/2014 - 23:01 | 5603875 zorba THE GREEK
zorba THE GREEK's picture

Foreign investor flows collapse 94%.... What the hell is wrong with the other 6%?

Mon, 12/29/2014 - 22:25 | 5603742 suteibu
suteibu's picture

Japan has to cut labor costs but doing so will only kill the consumption-driven economy.  It is a Catch-22.  The best Abe can do is finish his term  alive and then become an anime voice actor like Koizumi.

Mon, 12/29/2014 - 22:32 | 5603772 Cognitive Dissonance
Cognitive Dissonance's picture

Or become a spokesperson for Depends.

Mon, 12/29/2014 - 22:38 | 5603795 suteibu
suteibu's picture

Very nice.  I can't believe I missed that one.

Mon, 12/29/2014 - 23:38 | 5604003 Chipped ham
Chipped ham's picture

Or the Hurry-Cane?

Mon, 12/29/2014 - 22:39 | 5603803 i_call_you_my_base
i_call_you_my_base's picture

"Foreigners are “momentum jockeys” who tend to follow the trend..."

I think it's probably the 4.4% loss.

Mon, 12/29/2014 - 22:46 | 5603826 Carpenter1
Carpenter1's picture

“We need to see a framework where growth isn’t dependent on monetary easing,” Ayako Sera, a market strategist at Sumitomo Mitsui Trust, which oversees $325 billion in assets. “If not growth, then at least a way to increase productivity. For now there’s nothing like that, so I imagine it’ll be hard for stocks to keep going higher and for foreigners to take an interest in them.”

---------------------------------------

Looks like we have another candidate for a free nail gun.

Mon, 12/29/2014 - 22:49 | 5603838 suteibu
suteibu's picture

30,000 suicides a year in Japan for a generation.  Someone will just throw him under a train, no questions asked.

Mon, 12/29/2014 - 23:28 | 5603971 knukles
knukles's picture

Rats why re carr rit burret tlain.

Mon, 12/29/2014 - 23:34 | 5603988 suteibu
suteibu's picture

The gag is getting old, however, you are at least somewhat fluent in proper Engrish.  Kudos.

Mon, 12/29/2014 - 23:05 | 5603890 Soul Glow
Soul Glow's picture

Try selling a Japanese index fund.  It's harder than selling a gold miners fund.

Mon, 12/29/2014 - 23:33 | 5603987 Chipped ham
Chipped ham's picture

Harder than Chinese arithmetic?

Mon, 12/29/2014 - 23:46 | 5604025 suteibu
suteibu's picture

I would put a 12 yo Chinese kid with an abacus up against a 12 yo American kid with a calculator any day.

Tue, 12/30/2014 - 00:07 | 5604090 hooligan2009
hooligan2009's picture

like these you mean?

http://www.amazon.com/Chinese-Electronic-Multiplication-Table-calculator...

i don't mock the youth (under 30's) of any country, they are entitled to ignore their parents bullshit and opt out anytime they want to.

the next "mind the gap" change won't be one adults have seen before (like the drugs of the seventies, or the parties of the eighties, the collapse of communism in the nineties or the zombification of youth in the zeros).

the youth of every country has most of the radical, force for change, energy. the experience and wisdom of adults attempts dominate that energy. if the dominance of adults fails (usually because it is corrupt) youth will invent change as soon as it has a catalyst.

who knows what the catalyst will be; maybe there will be the equivalent of the tearing down of the physical berlin wall, with a tearing down of the psychological wall of mirrors and lies when the truth of "no we can't" is revealed v snake oil jingoistic bullshit of "yes we can"... but radical change starts with the youth of any country overthrowing the corruption of prevailing adult failures.

 

Tue, 12/30/2014 - 08:00 | 5604538 panicearly
panicearly's picture

Writing on the calculator is Japanese.

Tue, 12/30/2014 - 19:47 | 5607236 hooligan2009
hooligan2009's picture

ohhhhh... but its made in china though!

Mon, 12/29/2014 - 23:08 | 5603900 yogibear
yogibear's picture

LOL, 

It's the Federal Reserve's playbook. Who do you think came up with Japan's economic plan?

The US follows Japan down the path of currency trashing.

All fiats go to zero.

Mon, 12/29/2014 - 23:07 | 5603902 will ling
will ling's picture

still maintain the only way out for nips is , at the monkey's behest, to weaponize their copious uranium and attack china to free up US neocons to sneak attack russia.

maybe this the script all along?

Mon, 12/29/2014 - 23:32 | 5603982 Chipped ham
Chipped ham's picture

Sayonara!

Mon, 12/29/2014 - 23:41 | 5604007 starman
starman's picture

No more Samurai no more Japan! 

All has been lost decades ago.

Mon, 12/29/2014 - 23:54 | 5604053 Kina
Kina's picture

quick...time to parachute in The Krugman

 

Tue, 12/30/2014 - 00:09 | 5604092 hooligan2009
hooligan2009's picture

without a backpack

Tue, 12/30/2014 - 11:29 | 5605036 toadold
toadold's picture

Don't forget to raise taxes when you devalue the money.  Also when you drop Krugman from 30,000 ft. remember to tie a small drogue parachute to his ankles so that he'll hit head first for maximum penetration.

Wed, 12/31/2014 - 04:57 | 5608291 kappal_toba_dhu...
kappal_toba_dhurr_ne_thook's picture

Please don't use Bloomberg articles.   Bloomberg is perhaps the most anti-Asian, Anti-Japan mainstream publisher in USA.  They print the most obscene articles AND keep touting USA government line that "all is well in USA."  Please at least use articles from other sources.  Thank you deekra (dear).

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